How the Age Pension is backdated…

And how to avoid ‘the gap’

Qualifying for an Age Pension is a process most Australians will experience at some stage in their retirement. Timing your application and knowing how back pay works will help you  to avoid missing out on much-needed income. Today Retirement Essentials Head of Customer Service, Steven Sadler, steps us through the rules.

The main rule is that the Age Pension is backdated to either the day you lodged your application or the day you became eligible, whichever is the more recent of the two. Here’s how it works.

Day of lodgement

This differs depending upon the way that you apply. If you apply through Centrelink’s website (as Centrelink prefers), the claim is not considered lodged until the application questions are answered as well as all supporting documents have been provided. This makes sense because Centrelink doesn’t wish to waste time assessing claims that don’t have all the necessary supporting documents. 

However, if you apply with Retirement Essentials or directly on your own behalf (by handing in a paper copy of the claim forms at a branch) then the day you submit your claim is considered the day of lodgement, even if you failed to supply all required supporting documents.

Day of eligibility

Most people know and love this as the day they turn 67. Some people even know that you can apply 13 weeks prior to turning 67, but you’ll only receive payments from your birthday. What very few people know is that you can actually apply 13 weeks prior to meeting ANY of the eligibility criteria (not just age) and still be approved. But as with the age rule, you only get paid from the day you become eligible.

Let’s say you are 70, working full-time and earning a salary over the threshold, so technically ineligible but planning to retire in eight weeks’ time. You can lodge your claim now even though you exceed the threshold. That’sbecause, as long as you provide the proof of retirement (such as a separation certificate or equivalent) then you can be approved. But you will only be back paid to the day of retirement. This is very handy for those trying to avoid a gap period between losing employment income and gaining Age Pension payments. This technicality is not stated anywhere on Centrelink’s website but is useful for our members seeking to streamline their potential payments.

What if you are declined? 

So, your claim got declined, which is frustrating, but the good news is that it isn’t set in stone effective immediately. You have 13 weeks from the date you were declined to go back to Centrelink to request an appeal if you can now prove your eligibility. If your appeal is successful, then your entitlements will be back dated to the day of lodgement/eligibility. The tricky part is that you only have one shot at appealing, so if you are declined because you were not able to provide, say, three documents, you must provide all three within the 13 weeks and before you request the appeal. If you try to appeal with only one of the three, then when the assessor reviews this information, they will decline your appeal as you have not provided sufficient evidence. And then that’s it, you can’t appeal a second time. You will now have to lodge a new claim and then the back dating starts again, as of the date of the new claim.

What about a change in circumstance? 

Let’s say Iris, who is on a part Age Pension has to spend $40,000 of her super on medical expenses. She informs Centrelink that her financial assets are now $40,000 lower.  Would the adjusted (i.e. higher) fortnightly amount be back paid to the date she informs them? Or do the wheels grind slowly and her payment only changes from when Centrelink confirms this?

There’s good news here.

So long as you notify Centrelink (with evidence) of a change within 14 days of the change occurring, your payments will be backdated to the day of the change, even if it takes a couple of months to process it. If you haven’t notified Centrelink within the 14 days, any changes will only be effective from the day Centrelink action it.

It’s difficult keeping up with all the rules and detail of Age Pension entitlements. That’s why we write about  the knowledge and experiences of our team of Age Pension entitlements support staff as well as our financial advisers to keep you up to date and aware of any tiny rule changes.  An Age Pension consultation can help you with all the rules if you need further assistance. 

At any time, you can check your own eligibility for free using the Retirement Essentials Age Pension Entitlements Calculator. You may also benefit from a Maximising your entitlements consultation if you want to ensure you are receiving everything you are owed.

Were you aware of the way back dating works?
Or did these rules come as a surprise?